Senate passes reworked payday loans bill

After three years of trying to put new limits on payday loans in Colorado, supporters are closer than ever to seeing a bill passed.

The Senate today narrowly approved a revised version of House Bill 1351 that would eliminate traditional two-week payday loans in favor of six-month loans that still allow lenders to charge more in interest and fees than the original amount borrowed.

“The big change is you don’t have a gun at your head every two weeks,” said Sen. Rollie Heath, D-Boulder, who led Senate efforts to rewrite the House’s version of the bill.

Under the House version, interest on payday loans would have been capped at 45 percent as an annual percentage rate. Lenders also would have been limited to charging a borrower no more than a $50 loan origination fee per year.

Under current law, borrowers can extend a two-week loan four times – thus incurring new fees each time – before they are put on a payment plan. The result, say critics of the system, is that payday lenders charge well over 300 percent interest in fees for a loan, as measured as an annual percentage rate.

Short-term lenders have always said it is inappropriate to apply an annual percentage rate to a two-week loan made for $500 or less.

With the amended Senate bill, someone who borrows $500 could be charged as much as $337.50 in interest and fees for a six-month loan, Heath said. A borrower could extend the loan once for another six months, incurring as much as $675 in interest in fees.

Applied as an annual percentage rate, that would be 135 percent, well higher than a typical loan but far less than what short-term lenders now charge.

But the amended version of the bill was still unpalatable to any Senate Republicans, and three Democratic senators – Mary Hodge of Brighton, Linda Newell of Littleton and Lois Tochtrop of Thornton – voted against the measure.

Despite the changes, critics said the bill would shutter hundreds of payday lending stores around the state, eliminating as many as 1,600 jobs. A Republican amendment to have the bill take effect Dec. 31, rather than its currently scheduled Aug. 11 effective date, failed.

Republicans said payday lenders locked into year-long property leases wouldn’t be able to make enough money to pay the rent through the end of the year.

“We’ve got two feet on the throat of this industry,” argued Sen. Bill Cadman, R-Colorado Springs. “Let’s at least take one of the feet off their throat so they can get their affairs in order as we put them out of business.”

Other opponents, like Tochtrop, argued that desperate borrowers would now just rely on organized crime loan sharks to get the money they need for emergencies.

“They’re going to have broken legs and won’t have money to get that fixed, either,” she said.

The Senate approved the bill on an 18-17 vote, and the amended legislation has to go back to the House, which can approve the changes or seek a conference committee.

Rep. Mark Ferrandino, D-Denver, the House sponsor of the bill, said the Senate version, though far weaker than what wanted, was still “a good step towards ending the cycle of debt and stopping predatory lending.”

Ferrandino said he was optimistic the House would approve the Senate version.

“The big change is you don’t have a gun at your head every two weeks,” said Sen. Rollie Heath, D-BoulderNo one had a gun to their heads. People are free to either chose or not chose to use the service. Typical, Democrats intruding. Saving us from ourselves. I'd spit in their faces if I could.

Payday loans, no immediate first deposit alternatives aren’t the most popular options any longer, because they take longer to process than the electronic alternatives. It is possible to get the money sent to you, if that is what you desire, however. The online alternatives are still the fastest, quickest and most practical way to get the cash you might seriously need, but pay day loan loans, no immediate first deposit alternatives still are available.

Payday loans such as no credit assessment and no fax is needed, you can implement it at any time and anywhere you like, no time and no geographical restrictions as long as you are lived in United States.

Joey Bunch has been a reporter for 28 years, including the last 12 at The Denver Post. For various newspapers he has covered the environment, water issues, politics, civil rights, sports and the casino industry.